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Mumbai-400020.Editor:VipulK.Choksi
No. MCS/149/2022-24
R.N.I. No. MAHENG/2012/47041
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The
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Vol. XI | No. 2 | November 2022
No. MCS/149/2022-24 / R.N.I. No. MAHENG/2012/47041 - Total Pages: 140
Chamber's
CADRE
TIO
A N
C
I S
L O
P F
M
I
Income Tax on Joint
Development /
Re-development
of Proprty

November 2022 | The Chamber's Journal | 3 |
Editorial — Vipul K. Choksi......................................5
From the President — Parag S. Ved.........................7
SPECIAL STORY — IMPLICATIONS OF GST
AND INCOME TAX ON JOINT DEVELOPMENT/
RE-DEVELOPMENT OF PROPERTY
Indirect Tax
Applicability of GST on Redevelopment
Rights/FSI/TDR — Sudipta Bhattacharjee &
Rishabh Prasad...........................................................9
Redevelopment of Cooperative Housing
Societies - GST Implications — Nishant Shah,
Varun Parmar & Rushil Shah......................................
Possible GST implications in Self Redevloment/
Landowner- Tenants - Developer Model
— Sushil Solanki & Abhishek Deodhar.....................
GST Implication on Development of
Slum Rehabilitation Projects (SRP)
— Vinaykumar Jain & Jay Chheda.............................
Applicability of GST on Joint Venture
Development Agreement — Uchit Sheth..................
Direct Taxes
Accrual and taxability of income in the
hands of various stakeholders involved in a
re-development of property under the Income Tax
Act, 1961 (Revenue recognition, PCM vs. CCM,
ICAI Guidance Note, ICDS III
— T. S. Ajai..................................................................
Analysis of section 45(5A) of the Income
Tax Act, 1961 in case of a Joint Development
Agreement — Suhas Bora..........................................
Issues arising out of Section 56(2)(x)(b) of
Income-tax Act in case of immovable
property transactions — Abhay Pitale......................
Contents
Vol. XI | No. 2 | November – 2022
i
DIRECT TAXES
Supreme Court — Keshav Bhujle..............................
Tribunal — Neelam Jadhav &
Tanmay Phadke............................................................
INDIRECT TAXES
GST Gyaan — Recent Changes in GST
— Chirag B Mehta & Hemant N Regmi.....................
GST – Recent Judgments & Advance Rulings
— Naresh Sheth & Jinesh Shah..................................
Service Tax – Case Law Update —
Rajiv Luthia & Keval Shah..........................................
CORPORATE LAWS
Case Law Update — Makarand Joshi........................
OTHER LAWS
FEMA Update & Analysis
— Hardik Mehta & Tanvi Vora...................................
Best of The Rest
— Rahul Hakani & Niyati Mankad.............................
The Chamber News
— Vijay Bhatt & Mehul Sheth....................................

Special Story — Redevelopment of Co-operative Housing Societies - GST Implications
| 16 | The Chamber's Journal | November 2022
After the two years slow down due to COVID-
19 pandemic, there is again growth in the real
estate sector in India. Redevelopment projects
are highly prevalent especially in metros and
other large cities during this growth phase.
Post the introduction of Goods and Services
Tax (“GST”) in 2017, the implications for
the real estate sector have been dynamic and
have continuously undergone change with
the evolution of understanding of the nature
of transactions including sub-transactions
of certain large real estate projects. The tax
authorities have been proactive in coming
out with clarifications, notifications and
amendments where required in a prompt and
effective manner. The taxation of real estate
sector has undergone significant change from
a GST perspective effective from 1 April 2019.
As GST is not applicable on transactions
relating to sale of immovable property and
input tax credit is also restricted in case of
real estate development projects, the need
to effectively analyse the impact of GST on
transactions of redevelopment of co-operative
housing societies (“Redevelopment Project”)
gains further significance as optimisation
of GST facilitates the overall cost of the
Redevelopment Project. This article attempts
to evaluate GST implications on execution
of Redevelopment Project for a co-operative
housing society.
It is important at the first instance to
understand the key stakeholders in case of a
Redevelopment Project:
a. Society members (“Existing Members”):
These are the existing members of the
co-operative housing societies who
own the flats in the existing building
premises.
b. Housing society: This is the statutorily
formed co-operative housing society
of which the Existing Members are
shareholders. Such societies are formed
under the laws applicable in the
respective State in which the premises/
building is located. In certain states, the
society is replaced by a condominium in
which ownership of individual units is
considered as owning of proportionate
share in the overall premises including
land thereof.
c. Promoter Developer (“Promoter”):
The real estate developer with whom
the society or members contractually
agree to redevelop the existing premises/
building.
d. New Buyers: These are the persons
who would be purchasing “additional
saleable flats/units” that become
Redevelopment of Co-operative Housing Societies
- GST Implications
Nishant Shah
Advocate
Varun Parmar
Advocate
Rushil Shah
Advocate

available in the hands of the developer
upon redevelopment of the premises.
A. Redevelopment of Housing Society -
Transaction Structure
As we proceed to analyse the GST
implications of transaction relating to
Redevelopment Project it is important to
understand the transaction structure and the
role of each stakeholder in this structure.
From the society’s perspective the
redevelopment results in coming into existence
of a new premise for the existing members
and in certain cases some additional area for
the members. From the Promoter’s perspective,
the redevelopment would result in additional
space becoming available for outright sale to
new flat buyers.
Nature of Sub-Transactions in a
Redevelopment Project
i. The initiation of the entire transaction
is through the execution of a
redevelopment agreement which results
in the transfer of development rights by
the society (on behalf of its members) to
the Promoter. Alternatively, in case of a
condominium such agreement would be
an agreement between the members and
Promoter.
ii. The other aspect of the development
agreement is the supply by the Promoter
to the existing members with one or
more of the following:
a. Newly constructed flats of the same
area or higher area.
b. Car parking space in the building.
c. Rental charges/Hardship allowance
for the period of displacement
when the old premises is
demolished till the new premises
is handed over to the society/its
members.
d. Corpus of funds to the society/
members.
iii. The third aspect of the redevelopment
agreement is the sale of additional space
available with the developer on out-right
basis to New Buyers.
The above transaction is depicted in the form
of a diagram hereunder:

B. Legal Framework
As we proceed to analyse the GST
implications on a Redevelopment Project, it is
important that we understand the legislative
framework applicable to such transactions.
1. Co-operative Societies Act/Law
relating to Condominiums
States which have a legislative framework
regulating housing societies, generally contain
provisions dealing with redevelopment of
such societies. For instance, Section 79A of
The Maharashtra Co-operative Societies Act,
1960 (“MCSA”) empowers the authority to
come out with regulations for determining the
manner in which the Redevelopment Project
should be carried out. In this regard the
Government Resolution dated 4th July 2019
has been issued by the relevant authority in
Maharashtra.
2. GST Law
Various provisions under the GST Legislations
relating (i) to supply, (ii) time of supply, (iii)
value thereof, etc. get triggered in case of
a Redevelopment Project. Considering that
a contract for redevelopment to a certain
extent is in the nature of a barter transaction,
the determination of these aspects for
the purpose of levying GST become even
further complicated. Keeping in mind these
complications and to avoid ambiguity in
determination of GST liability, the CBIC has
issued a series of notifications dealing with
transactions that entail transfer of development
rights to the Promoter and provision of built-
up area to the transferor of such development
rights. A list of these notifications is set out
as under:
Notification No. Description
03/2019-Central Tax (Rate)
[Amends the rate notification
11/2017-Central Tax (Rate)]
The notification prescribes the rate of GST in respect of
construction of residential/commercial apartments and also
provides for mechanism to value construction service, when
provided against transfer of development rights.
[Amends the exemption
notification 12/2017-Central
Tax (Rate)]
This notification exempts supply of service provided by way
of transfer of development rights for construction of residential
apartments in respect of which entire consideration has been
received before the issuance of completion certificate or first
occupancy. The notification also provides for the mechanism
to value development rights in certain situations.
[Amends the Reverse Charge
Notification 13/2017-Central
Tax (Rate)].
This notification provides for taxability in respect of service
provided by way of transfer of development rights on reverse
charge basis, in terms of which liability to pay tax has been
cast upon the Promoter.
06/2019-Central Tax (Rate) This Notification inter alia provides for:
i) The Promoter to be the registered person to pay tax on
supply of development rights and on the construction
services against such development rights,
ii) time when tax is to be paid in respect of services
mentioned in i) above.

Each of the above notifications and other
relevant provisions as applicable to the
transaction of redevelopment have been
referred to and dealt with in the analysis
carried out hereunder for ease of reference.
Legal controversies surrounding deemed
valuation
Divergent from the normal process of valuation
as set out under Section 15 of CGST Act, the
valuation in relation to various aspects in
case of Redevelopment Project is governed
by specific valuation methodology provided
by notifications issued in this regard viz.
11/2017-Central Tax (Rate) and 12/2017-Central
Tax (Rate).
One may argue the GST Council’s free
handedness in prescribing different valuation
methodology that are quite divergent from
the legislative mandate contained in Section
15. This in turn brings into question the
GST Council’s powers to recommend and the
Central Government’s power to legislate such
valuation methodologies under the GST law.
Section 15(5) of CGST Act, however, provides
that notwithstanding the general valuation
provisions, value of certain notified supplies
shall have to be determined in the manner
prescribed by the Government on the
recommendation of GST Council. The above
Notifications have inter alia been issued under
the said Section 15(5) to provide for deemed
valuation provisions for the transactions of the
nature as described above.
It is however pertinent to note that the
word ‘prescribed’ is defined under Section
2(87) of CGST Act to mean “prescribed by
rules”. Accordingly, it may be argued that
the Notifications insofar as they prescribed
deemed values for certain supplies are ultra
vires the CGST Act. This aspect has been
dealt with in a recent decision of the Hon’ble
Gujarat High Court1
.
Implications under GST
Having understood the nature of transaction
and the legal framework applicable to such
transactions, we now proceed to evaluate the
implications under GST law on the various
sub-transactions (as discussed in Para A above)
of a Redevelopment Project.
C. Implications on Transfer of
Development Rights
The subject of “development rights” has been
a matter of controversy over last few years
and therefore for a better understanding
of the concept of development rights it is
important that we track the evolution of
the understanding of this concept through
the Service Tax regime before proceeding to
analyse its implication under GST.
Transfer of Development Rights Pre-GST
The term ‘development rights’ had not been
defined under the Finance Act, 1994 (“Finance
Act”). The development rights are nothing but
rights arising out of land which is per se an
immovable property.
In a plethora of decision2
, a view has
been upheld that right associated with an
immovable property partakes the nature of an
immovable property.
1. Munjaal Manishbhai Bhatt vs. UOI [2022 (5) TMI 397 – Gujarat High Court]
2. Chheda Housing Development Corporation vs. Bibijan Shaikh Farid [MANU/MH/0070/2007]; State of Orissa
vs. Titaghur Paper Mills Co. Ltd [MANU/SC/0325/1985]; Sadoday Builders Private Limited vs. Joint Charity
Commissioner [WP No 4543/2010]

In light of the judicial precedents (relating to
the service tax regime), it could be said that
the development rights being rights arising
out of land, are akin to an immovable property
and hence were outside the scope of the
definition of ‘Service’ under Service Tax.
Transfer of Development Rights - Impact
under GST
The definition of ‘services’ as given in the
Central Goods and Services Tax Act (“CGST
Act”) is very wide and covers all things which
do not classify as ‘goods’, unless specifically
excluded. ‘Goods’ have been defined to mean
every kind of movable property. Therefore,
development rights being rights associated
with land would not qualify as ‘goods’ and
would qualify instead as a ‘service’. Further, in
terms of Schedule III of the CGST Act , sale of
land is neither treated as goods nor services.
However, since the development rights are
rights arising out of land and not per se land,
the transfer of the same is not within the
ambit of Schedule III under ‘sale of land’ and
therefore liable to GST, unless specifically
exempt. Consequently, transfer of development
rights by society would qualify as a supply of
service which would be liable to GST unless
specifically exempt.
Levy of GST
Having concluded that transfer of development
rights is liable to GST, let us now analyze
how this levy operates. Notification No.
04/2019 Central Tax (Rate) dated 29.03.2019
(‘Notification No. 04/2019’) notified that the
services by way of transfer of development
rights on or after 1 April 2019 will be exempt
from levy of GST, subject to fulfilment of all
the following conditions –
i Development rights should have been
transferred on or after 1 April 2019
ii Such development rights should be used
for the construction of residential units
by a Promoter
iii Units in the project should be intended
for sale to a buyer whether wholly or
partly and
iv Such units should be sold prior to
receipt of completion certificate/first
occupation in the project.
Let us examine the GST implications in the
following scenarios.
Scenario I – Residential Project
Where development rights are being
transferred by the society after 1 April 2019
and where the project is a residential real
estate project wherein all the units (including
additional units) are residential units which,
apart from being provided to existing members
of the society, will also be marketed and
sold to independent buyer, the transfer of
development rights will be exempt from levy
of GST in terms of Notification 04/2019,
subject to the said residential units being sold
prior to receipt of completion certificate/first
occupation.
Scenario II – Mix Development (Residential
+ Commercial Units)
The exemption from levy of GST on transfer
of development rights does not mandatorily
require a project to be a 100% residential
project. The exemption will not be available
to the extent development rights are used for
construction of commercial units. Therefore,
in a mixed development project, proportionate
exemption will be available to the extent the
development rights are used for construction
of residential units.
The manner of determination of the amount
which would be exempt from the levy of GST
on transfer of development rights prescribed
under Notification No. 04/2019 is set out
below.

Payment of GST under reverse charge
[Notification No. 05/2019 Central Tax (Rate)
dated 29.03.2019 (‘Notification No.05/2019’)
The exemption from levy of GST on transfer
of development rights is not absolute but
conditional upon the fulfilment of the
conditions prescribed under Notification
No.04/2019. The scenario in which
development rights will be liable to GST are
set out below –
i Development rights used for
construction of commercial units in a
project;
ii Development rights attributable towards
residential units that remain unsold
on the date of receipt of completion
certificate/first occupation.
The Government also amended the
Notification No. 13/2017 – Central Tax
(Rate) dated 28.06.2017 (“Reverse Charge
Notification”) to include the transfer of
development rights under reverse charge
mechanism. Therefore, in a scenario where
the transaction becomes liable to GST, the
recipient (i.e. the Promoter) will be liable to
pay GST.
Applicable Rate of GST
Notification No. 11/2017-Central Tax (Rate)
dated 28.06.2017 (as amended) [‘Rate
Notification’] specifies the SAC Code for
different services and the applicable rate qua
each SAC Code. The Government has issued
a compilation of FAQs on Real Estate Sector
(FAQs) vide F.No.354/32/2019- TRU dated
07.05.2019 wherein in the reply to Q 7 it is
clarified that GST on transfer of development
rights gets covered under HSN Code 9972
for Real Estate services [Sr. No. 16(iii) of the
Rate Notification] on which the applicable
rate of GST is 18%. Even if it is considered
that transfer of development rights does not
get covered under the said entry of the Rate
Notification, since the transaction is not
specifically covered under any other entries, it
will fall under the residuary category liable to
18% GST. Hence, the applicable GST rate on
supply of service of transfer of development
rights will be 18%. It is however important
to note that while the rate of GST is 18%,
in terms of Notification no. 04/2019, the
liability in case development rights used for
construction of residential units has been
capped at 5% of the value of a similar flat at
the time of receipt of completion certificate/
first occupation. GST is capped at the
applicable rate of 1% (instead of 5%) of the
value in case of affordable residential units.
The amount of GST which the promoter would be liable to pay under reverse charge mechanism
Amount of GST payable on TDR for carpet area of residential apartment in
construction of the residential project which remain un-booked on the
apartments in project date of issuance of completion certificate
-----------------------------------------------------------
Total carpet area of residential apartments
In the Project

Time of Supply [Notification No 06/2019
- Central Tax (Rate) dated 29.03.2019]
(‘Notification No. 06/2019’)
Since the service of granting of development
rights may be held liable to GST and therefore
it becomes imperative to evaluate the time of
supply for payment of tax by the Promoter
under reverse charge.
1. For transfer in lieu of constructed area
The time of supply where the development
rights have been transferred in lieu of
constructed area to Existing Members, is
required to be determined independently for
the following –
i. Development rights used for construction
of residential units which remain unsold
at the time of receipt of completion
certificate/first occupation:
Notification No. 06/2019 prescribes
that the liability to pay tax in respect
of the amount attributable towards the
development rights used for construction
of residential units remaining unsold,
shall be in a tax period not later than
the tax period in which the completion
certificate is issued or the date first
occupation falls, whichever is earlier.
ii. Development rights used for commercial
units
Similar to the residential unit, the
liability to pay tax on the development
rights used for construction of
commercial units, has been prescribed
to be in a tax period not later than the
tax period in which the completion
certificate is issued or the date first
occupation falls, whichever is earlier.
2. For transfer in lieu of monetary
consideration
In case of monetary consideration paid for
transfer of development rights, following is the
time of supply applicable in both scenarios:
i. Residential units which remain unsold
certificate/first occupation
In terms of Notification No. 06/2019
wherein the liability to pay tax arises
in respect of the amount attributable
towards the development rights used
for construction of units remaining
unsold, has been prescribed to be in a
tax period not later than the tax period
in which the completion certificate is
issued or the date first occupation falls,
whichever is earlier.
ii. Commercial Units
Where the development rights have
been transferred in lieu of revenue
share or monetary consideration where
tax invoice has not been issued,
the liability to pay tax in respect of
the amount attributable towards the
development rights used for construction
of commercial units, shall be the date
of provision of services i.e. date of
transfer of the development rights.
This is substantiated by Question 14
of FAQ [F.No. 354/32/2019-TRU], dated
07.05.2019.
In case of supplies in respect of which
tax is paid or liable to be paid on
reverse charge basis, the time of supply
is provided under Section 13(3) of the
CGST Act. In terms of Section 13(3) of
the CGST Act, where the development
rights have been transferred in lieu of
monetary consideration and invoice
is issued, the time of supply of
service shall be the date immediately
following sixty days from the date of
issue of invoice or the date of payment,

Valuation
Another important aspect while determining
GST levy in case of a Redevelopment Project
is the determination of value
1. For transfer of development rights in
lieu of constructed area
Section 15 of the CGST Act provides that the
value of the service will be the transaction
value i.e. the price paid or payable for the
said supply. In order to determine the value of
supplies where the consideration is not solely
in money terms, the value will be arrived
based on the method prescribed under Chapter
IV of CGST Rules titled “Determination of
Value of Supply” (“Valuation Rules”). Rule 27
of CGST Rules provides for the methodologies
to arrive at the value of the service in case the
consideration is not wholly in money.
However, in terms of power given under
Section 15(5) of the CGST Act, the
Government has, vide Notification No.
04/2019, notified the methodology to
be adopted for determining the value
of development rights, more particularly
described in the scenarios set out hereinafter:
i. Residential units which remain unsold
certificate/first occupation
Where the transfer of development
rights is for consideration in the
form of constructed area, the value of
development rights has been deemed to
be equal to the value of similar units in
the Project charged by the Promoter to
the independent buyers nearest to the
date on which the development rights
is transferred to the Promoter.
It may be pertinent to note that the
above-mentioned methodology will
compute the value of the entire
development rights transferred to the
Promoter and used in the Project.
However, the GST liability shall be
restricted to the extent of development
rights attributable towards residential
units remaining unsold at the time of
receipt of completion certificate/first
occupation.
The Entry 41A of the Exemption
Notification prescribes the method for
computation of GST liability to be paid
by the Promoter under reverse charge
mechanism on development rights
attributable towards residential units
remaining unsold on the date of receipt
of completion certificate/first occupation
shall be calculated in the following
manner:
The amount of GST which the promoter would be liable to pay under reverse charge mechanism
Amount of GST payable on TDR for carpet area of residential apartment in
construction of the residential project which remain un-booked on the
apartments in project date of issuance of completion certificate
-----------------------------------------------------------
Total carpet area of residential apartments
In the Project

As mentioned earlier, the Government
has capped the maximum lability to be
discharged by the Promoter in respect
of residential units remaining unsold
in the Project on the date of receipt of
completion certificate/first occupation.
In terms of the second proviso of Entry
41A of the Exemption Notification,
the amount of tax payable shall not
exceed 5%/1%3
of the value in case
of residential units remaining un-
booked on the date of issuance of the
completion certificate.
ii. Commercial units in the Project
The exemption benefit is not available
for development rights used in the
construction of the commercial units
in a project. Accordingly, the entire
value of development rights attributable
towards commercial area shall be the
value on which GST is payable.
iii. Mix Development
The total value on which GST will be
payable will be the combined value
as computed in (i) and (ii) above.
However, it may be pertinent to note
that the capping on GST liability
will be applicable only for residential
units remaining unsold in the mixed
development project and not for
commercial project.
2. For transfer in lieu of monetary
consideration
In terms of Section 15(1) of the CGST Act, the
value of supply of development rights shall
be the transaction value, which is the price
actually paid or payable for the said supply.
Other monetary consideration such as hardship
allowance, corpus fund, rent etc.
Other consideration such as Hardship
allowance, Corpus Fund, Rent etc. may be paid
by the Promoter to the Society/Landowner as
part of consideration towards the development
rights transferred in favour of the Promoter.
Where the transfer of development rights is
considered as a supply, then, other monetary
consideration should also be added to the
valuation for the purpose of computing
the GST liability. The reason to add other
monetary consideration for calculation as part
of overall consideration is that notwithstanding
the terminology used to explain such
payments, the nature of transaction is akin
to a mix consideration which involves
consideration in the form of constructed units
as well as other monetary consideration.
Thus, against the transfer of development
rights, the consideration is paid by the
Promoter in two-fold i.e. constructed units
and other monetary consideration. This being
the case, the value of both these elements
must be considered for determining the value
of development rights.
It may however be pertinent to note that the
valuation mechanism specified in Notification
04/2019 provides that value of service by
way of transfer of development rights against
consideration in the form of residential or
commercial units shall be deemed to be
equal to the value of similar units sold to
independent buyers. Therefore, one may argue
3. The concessional rate of 1.5% GST [Effective tax rate of 1%] has been extended in respect of residential units
in a RREP as well as REP other than RREP, subject to fulfillment of the following conditions:
(i) Carpet area of the affordable residential unit should be upto 60 sq. m. in metropolitan cities or 90 sq. m.
otherwise; and
(ii) The gross amount charged for the unit should not be more than Rs. 45 lakhs.

that the GST Law has already prescribed a
deemed value for development rights and
therefore other monetary consideration are not
required to be added to such deemed value.
D. Construction Services in Relation
to Units Handed Over to Existing
Members
Since the transaction of Redevelopment Project
is a barter transaction it is also important to
decipher the GST implications in relation
to the construction services provided by
the Promoter. Typically, GST payable on
such construction services is factored by
the Promoter in the total cost of executing
the Redevelopment Project and discharged,
whether such GST is separately collected or
not from the existing members.
As per Notification No.03/2019- Central Tax
(Rate), Dated 29.03.2019 (‘Notification 3/2019’),
the effective applicable rate of GST in respect
of constructed units handed over post 1 April
2019, will be as follows –
a) Residential Real Estate Project (‘RREP’) –
A project wherein the commercial area
is not more than 15 per cent of the total
carpet area is being defined as RREP. In
such project the applicable GST Rate
for the units handed over to Society/
Landowner will be 5%/1% for residential
units and 5% for commercial units.
b) Real Estate Project (‘REP’) other
than RREP - A project in which the
commercial area is more than 15% of
the total carpet area is a REP other than
RREP. The applicable rate of GST will
be 5%/1%4
for residential unit and 12%
for commercial unit.
Time of Supply
In this regard, it may be pertinent to refer to
Notification No. 06/2019 wherein the liability
to pay tax in respect of the construction
service provided to the Society has been
prescribed to be any time upto the date of
issuance of the completion certificate for the
project, or the date of its first occupation,
Valuation
Vide Notification No.03/2019, paragraph 2A
has been inserted in the Rate Notification
which provides the valuation mechanism of
the construction services being provided to the
registered person transferring the development
rights to the Promoter. In terms of Paragraph
2A, the value of construction service in
respect of the units to be handed over to the
Society shall be deemed to be equal to the
value of the similar units in the project sold
nearest to the date of transfer of development
rights after deducting 1/3rd of the total amount
charged for the unit towards land.
Input Tax Credit
In terms of Notification 03/2019, the Promoter
will not be eligible to avail the input tax
credit of GST paid in respect of goods and
services procured for the construction of a
RREP Project. However, it may be pertinent
to note that in case the project qualifies as a
REP other than RREP then the Promoter shall
be allowed to avail proportionate credit to the
extent of commercial area in such project.
4. Refer Foot Note 3 above.

E. Constructed Units Sold to New Buyers
1. Where consideration is received by
Promoter prior to receipt of completion
certificate or first occupation
whichever is earlier
In terms of entry 5(b) of Schedule II
to CGST Act, construction of building
intended for sale to a buyer except
where the entire consideration has been
received after issuance of completion
certificate or after its first occupation
whichever is earlier is treated as supply
of services under the GST. Therefore,
sale of unit to New Buyer before
receipt of completion certificate or first
occupation shall be chargeable to GST.
As stated in Para E above
Time of Supply
As per provision of Section 13 of CGST Act i.e
at the time receipt of consideration or issuance
of invoice whichever is earlier
Valuation
Section 15 of the CGST Act provides that the
value of service will be the transaction value
i.e. the price paid or payable for the said
supply. Further, as per Notification 11/2017,
the value of transfer of land or undivided
share of land, in such construction services
shall be deemed to be one third of the total
amount charged for such supply. Therefore,
GST shall be applicable on 1/3rd value of total
consideration charged for sale of units to New
Buyers.
Input Tax Credit
As stated in Para E above
2. Where consideration is received
by Promoter after the receipt
of completion certificate or first
occupation whichever is earlier
In terms of Schedule III entry 5 sale of
building is neither supply of goods nor
supply of services (subject to entry 5(b) of
Schedule II). Therefore, sale of units/flats post
completion certificate or first occupation shall
not be subjected to GST.
Conclusion
Each real estate project would have its own
nuances and therefore requires in depth
analysis of the facts on hand to derive the
applicability of GST provisions. The taxation
of real estate under GST is a complex issue,
however the authorities have tried to iron
out the complexities by issuing clarification
and amendment from time to time. The trick
in determining the GST liability in case
of Redevelopment Project lies in properly
analysing the various aspects thereof and
thereafter one also needs to be diligent
while applying the rate of tax, payment of
tax, valuation, availment of ITC in order to
be in compliance with the law. This also
gives avenue to the taxpayers to structure
and optimise the input tax credit wherever
applicable.


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